EXHIBIT 6.1
XXXX XXXXXX TERMINATION AGREEMENT
This Xxxx Xxxxxx Termination Agreement (the " Agreement") is made and
entered into this 1st day of March, 2001 (the "Effective Date") by and among
Xxxx Xxxxxx ("Xxxxxx"), Xxxxxx Xxxxxx ("Xxxxxx") and Easyriders, Inc. (the
"Company") with reference to the following facts:
R E C I T A L S
A. On or about September 23, 1998, Xxxxxx purchased from the Company
2,395,823 shares of the Company's common stock for a purchase price $7,300,000.
The $7,300,000 purchase price was evidenced by two promissory notes executed by
Xxxxxx in favor of the Company; one note, the "Xxxxxx Mirror Note" in the
principal amount of $5,000,000 and the other Note, the "Xxxxxx Note" in the
original principal amount of $2,300,000. No principal payments have been made
on said notes. The value of the Company's common stock has declined
significantly since the date of the transaction pursuant to which Xxxxxx
purchased shares of the Company's stock using the Xxxxxx Mirror Note and the
Xxxxxx Note. At the same time as the above described stock purchase, Xxxxxx
also purchased for $5,000,000 cash an additional 1,640,974 shares of the
Company's common stock. Since the date of the stock purchases described
hereinabove, Xxxxxx has acquired additional shares of the Company's common stock
such that he now owns an aggregate of 7,392,364 shares of the Company's common
stock.
X. Xxxxxx is a director and the largest shareholder of the Company. The
Company is indebted to Xxxxxx pursuant to, among other things, a Limited
Recourse Promissory Note dated September 23, 1998, payment of which is secured
by the Xxxxxx
Mirror Note. Amendment or cancellation of the Xxxxxx Mirror Note requires the
consent of Xxxxxx.
X. Xxxxxx presently serves as Chairman of the Board and is also an
employee and director of the Company. In his capacity as an employee of the
Company, Xxxxxx is the beneficiary of both an annual incentive plan and a long
term incentive plan pursuant to which the Company, depending on the results of
future operations and activities, may have significant liability to Xxxxxx. The
Company is further indebted to Xxxxxx for certain accrued salaries, bonuses and
expense reimbursements.
D. The parties hereto desire that (i) Xxxxxx terminate his positions as an
employee and director of the Company, (ii) Xxxxxx release the Company from
certain accrued obligations and (iii) the potential future obligations of the
Company under the above referenced incentive plans be eliminated.
X. Xxxxxx is separately entering into an agreement (the "Stock Purchase
Agreement") with Xxxxxx pursuant to which Xxxxxx will sell shares of the
Company's common stock to Xxxxxx at the same price as Xxxxxx is transferring
shares to the Company hereunder.
IT IS THEREFORE AGREED AS FOLLOWS:
1. Pursuant to Internal Revenue Code Section 108(e)(5), the purchase money
debt incurred by Xxxxxx, (including any interest which has accrued with respect
thereto) which is described in Recital A above and is evidenced by the Xxxxxx
Note and the Xxxxxx Mirror Note is hereby reduced to $1,200,000. To effect this
reduction the Xxxxxx Mirror Note is hereby cancelled in its entirety as though
fully paid and the outstanding amount owing on the Xxxxxx Note is hereby reduced
to $1,200,000.
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Xxxxxx hereby consents to cancellation of the Xxxxxx Mirror Note.
2. Upon the Effective Date of this Agreement and concurrently with the
debt reduction (the "Debt Reduction") described in Section 1 above, Xxxx Xxxxxx
hereby resigns as an employee, officer and director of the Company. In
connection with such resignation Xxxxxx hereby waives and releases the Company
from any obligation with respect to the payment to him of any accrued salary,
bonuses or expense reimbursement to which he might otherwise presently be
entitled except for payment to or for the benefit of Xxxxxx of the amounts
described in paragraph 3 below; the Company hereby acknowledges that upon
execution of this Agreement and consummation of the transactions described
herein, Xxxxxx will not be indebted to the Company for any amounts, and that
Xxxxxx will continue in accordance with the Company's director's and officer's
liability insurance and its articles and bylaws to be protected to the maximum
extent permitted by law from any loss, cost, expense, liability or claim
(including attorneys fees in defending any such claim) arising out of or related
to his conduct or activity as an employee, officer or director of the Company.
On the Effective Date: (a) Xxxxxx shall tender to the Company the resignations
of those directors designated by Xxxxxx under the Stockholder's Voting Agreement
between Xxxxxx and Xxxxxx dated September 23, 1998 (the "Voting Agreement"),
namely, Xxxxxxx Xxxxxxx, Xxxxx Xxxxx and Xxxxxx Gallery, and (b) thereafter the
Voting Agreement shall be deemed null, void, and of no further force or effect.
3. Within thirty (30) days following the Debt Reduction, Xxxxxx shall
deliver to the Company 4,500,000 shares (at a value of $.20 per share) in
satisfaction of $900,000 of the remaining
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$1,200,000 indebtedness of Xxxxxx to the Company under the Xxxxxx Note. At such
time as Xxxxxx receives from Xxxxxx the $300,000 amount referred to in the Stock
Purchase Agreement, Xxxxxx shall pay such amount to the Company in full
satisfaction of his remaining indebtedness to the Company under the Xxxxxx Note;
at the same time the Company will pay to Xxxxxx $4,617.00 to reimburse certain
agreed upon expenses. The Company further agrees to pay in full certain invoices
due the law firm of Palmieri, Tyler, Xxxxxx, Xxxxxxx & Xxxxxxx ("PTWWW") in the
aggregate amount of $12,779.50 representing legal services rendered on behalf of
Xxxxxx to which he was entitled to reimbursement by the Company. The Company
agrees to make the payments to PTWWW at a rate of at least $2000 per month,
until paid in full, with the first payment being made upon execution of this
Agreement.
4. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes any and all prior or
contemporaneous agreements between them with respect thereto.
5. Each of the parties and their permitted successors and assigns shall
execute and deliver any and all additional documents and writings and shall
perform any and all other acts that may be necessary or expedient in connection
with the consummation of any matter covered by this Agreement.
6. In any action between the parties seeking enforcement of any of the
terms and provisions of this Agreement, or in connection with any matters
coverage herein, the prevailing party in such action shall be awarded, in
addition to damages, its reasonable costs and expenses, including attorneys'
fees and fees of expert witnesses.
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
EASYRIDERS, INC.
By: /s/ J. Xxxxxx Fabregas
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J. Xxxxxx Fabregas
Its: Chief Executive Officer
By: /s/ Xxxx X. Xxxxx
----------------------
Xxxx X. Xxxxx
Its: Secretary
/s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
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